Global emerging markets performed well in the last week, thanks in part to the “surprising stability” of China’s economy, according to Aberdeen Standard Investments.
The positive run of emerging markets continued last month, supplanted by “better-than-expected” GDP growth of Russia and Brazil as well as the “continued strength” of China’s economy, according to Aberdeen Standard Investments’ latest Weekly Economic Briefing.
“Although most economists and China-watchers predicted this year would be focused on achieving stability – economic, financial, as well as social – few would have predicted Xi Jinping and his colleagues would be so successful,” the report said.
“China’s leaders have effectively managed external pressures from a new US administration, while also balancing the domestic risks created by ballooning financial sector leverage and runaway house prices.”
The renminbi had proved to be one of the highest-performing currencies in the month of August, the report said.
“This wave of ‘China stability’ has contributed to broader EM strength, both through the domestic demand channel and by boosting EM risk sentiment,” the report said.
China’s economic stability was a “reprieve” against the backdrop of escalating political tensions regarding North Korea.
Also boosting EM’s strong performance was Russia and Brazil’s GDP growth at 0.25 per cent quarter-on-quarter and 1 per cent quarter-on-quarter respectively, though India “surprised on the downside” with GDP growth dropping to 5.7 per cent year-on-year, “marking the weakest pace of growth in over three years”, the report said.